Insurance: Bhargav Dasgupta

I have bought a family floater health insurance for my parents. I want to know what will be the tax treatment? I paid around Rs 19,000 as premium. My father turned 65 after the policy issuance. My mother is 58. Will my investment qualify for the senior citizen deductions? In case it does not qualify for a senior citizen deduction this year, how will it be treated in the next financial year?
Section 80D of the Income-Tax Act provides tax benefits exclusively for health insurance. Since 2008-09, a deduction of Rs 15,000 has been allowed against health insurance premium paid for parents. In the case of parents being senior citizens, the deduction goes up to Rs 20,000.

You have paid Rs 19,000 as premium for your parent’s health insurance. Section 80D of the Act defines senior citizen as an individual who is aged 65 years or more during the relevant financial year; a criteria your father meets. Your parents have a “floater” policy which covers both of them under a single policy against the payment of a single premium. Hence, even one of them qualifying as a senior citizen (in this case your father) is sufficient for you to claim a deduction of up to Rs 20,000. So, your entire premium of Rs 19,000 may be deducted from your taxable income in this financial year.

I rented out my flat last year. Recently, I found that there were some damages to the wall and bathroom due to an unfortunate fire. Since I had purchased a householder’s policy, I approached the insurance company. However, the insurer claimed that since I had given the flat on rent, I could not claim any insurance. They said that the person taking the house on rent should have had a separate policy. Is there a solution?
Insurance policies are governed by the fundamental principle of insurable interest. This means that the compensation for financial loss is made only to those who suffer from it.

A householder’s policy covers the loss/damage to the structure and contents of the house. Even when the house is given on rent, the house owner continues to have insurable interest in the structure of the building and the contents owned by him/her. He/she can therefore take a policy and claim for any damage to the building, even when the house is rented out. In fact, even the person who has taken the house on rent can buy structure insurance for such property, to the extent that he/she is liable for damage to structure based on the lease agreement. Individuals, who stay on rent but own the contents inside the house, can also buy a home insurance policy which covers items such as consumer durables, furniture & fittings and jewellery against such perils as burglary. So, in this case, you are very much within your right to approach the insurance company and ask them to settle your claim.

Bhargav Dasgupta is the MD & CEO of ICICI Lombard GIC. 
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